Samaron Corp. v. United of Omaha Life Ins. Co.

Decision Date29 September 2014
Docket NumberNo. 3:12-CV-397,3:12-CV-397
PartiesSAMARON CORP. d/b/a TROYER, PRODUCTS, Plaintiff, v. UNITED OF OMAHA LIFE INSURANCE COMPANY, Defendant. UNITED OF OMAHA LIFE INSURANCE COMPANY, Third-Party Plaintiff, v. DAVID A. BUCK, Third-Party Defendant.
CourtU.S. District Court — Northern District of Indiana
OPINION AND ORDER

This matter is before the Court on: Troyer Products' Motion for Partial Summary Judgment, filed on September 13, 2013 (DE 60); United of Omaha Life Insurance Company's Motion for Partial Summary Judgment, filed on September 27, 2013 (DE 65); David A. Buck's Motion for Summary Judgment, filed on September 27, 2013 (DE 63); and Plaintiff Troyer Products' Request for Oral Argument on Summary Judgment Motions, filed on October 25, 2013 (DE 72). The Court finds that oral argument is not necessary, and Troyer's request for oral argument (DE 72) is thereforeDENIED. For the reasons set forth below, Troyer Products' Motion for Partial Summary Judgment (DE 60) is DENIED; United of Omaha Life Insurance Company's Motion for Partial Summary Judgment (DE 65) is DENIED as to Count I (breach of contract) and GRANTED as to Counts II (negligent misrepresentation) and III (bad faith); and David A. Buck's Motion for Summary Judgment (DE 63) is GRANTED. The Clerk is directed to enter judgment in favor of Buck on Counts I and IV of the Third-Party Complaint. This case remains pending as to Count I of the Second Amended Complaint only (the breach of contract claim).

BACKGROUND

On July 23, 2012, Samaron Corp. d/b/a Troyer Products ("Troyer") filed a complaint against United of Omaha Life Insurance Company ("United"), alleging that United breached its contract when it failed to provide Troyer with life insurance proceeds from a $1,000,000 policy insuring the life of Ron Clark ("Clark"). United then filed a Third-Party Complaint against David Buck ("Buck"), the recipient of the death benefit, alleging that, if sums were paid to him improperly, Buck owes a duty of contribution and indemnity to United. United also alleged conversion and theft against Buck, and sought prejudgment garnishment of Buck's assets pending resolution of this suit. A motion for prejudgment writ of attachment wasfiled but later withdrawn by the parties. It does not, however, appear that the count of the Third-Party Complaint asserting a right to prejudgment attachment was ever dismissed.

Troyer filed an amended complaint against United on November 9, 2012, alleging both breach of contract and negligent misrepresentation. The Second Amended Complaint was filed on August 14, 2013, again alleging breach of contract and negligent misrepresentation, but also alleging that United breached its duty of good faith and fair dealing. The parties stipulated to the dismissal of United's theft and conversion claims against Buck.

Shortly thereafter, the instant motions for summary judgment were filed. Troyer seeks summary judgment on its breach of contract claim only (Count I of the Second Amended Complaint). United, in turn, seeks summary judgment in its favor on all of Troyer's claims. Buck has filed a separate motion for summary judgment alleging that judgment should be entered in his favor on United's claim for contribution and/or indemnification because neither is available to United under the facts of this case. The motions are now fully briefed and ripe for adjudication.

DISCUSSION

The standards that generally govern summary judgment motions are familiar. Pursuant to Rule 56(a) of the Federal Rules of Civil Procedure, summary judgment shall be granted "if the movant shows that there is no genuine dispute as to any material fact and that the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a); see also Nebraska v. Wyoming, 507 U.S. 584, 590 (1993); Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). In other words, the record must reveal that no reasonable jury could find for the nonmovant. Karazanos v. Navistar Int'l Transp. Corp., 948 F.2d 332, 335 (7th Cir. 1991). See also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986). In deciding a motion for summary judgment, a court must view all facts in the light most favorable to the nonmovant. Anderson, 477 U.S. at 255; Trade Fin. Partners, LLC v. AAR Corp., 573 F.3d 401, 406 (7th Cir. 2009).

According to Rule 56:

A party asserting that a fact cannot be or is genuinely disputed must support the assertion by:
(A)citing to particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made for purposes of the motion only), admissions, interrogatory answers, or other materials; or(B) showing that the materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact.

Fed. R. Civ. P. 56(c). Furthermore, "[i]f a party fails to properly support an assertion of fact or fails to properly address another party's assertion of fact as required by Rule 56(c), the court may ... consider the fact undisputed for purposes of the motion [or] grant summary judgment if the motion and supporting materials - including the facts considered undisputed - show that the movant is entitled to it..." Fed. R. Civ. P. 56(e)(2),(3). "Whether a fact is material depends on the substantive law underlying a particular claim and 'only disputes over facts that might affect the outcome of the suit under governing law will properly preclude the entry of summary judgment.'" Walter v. Fiorenzo, 840 F.2d 427, 434 (7th Cir. 1988) (citing Anderson, 477 U.S. at 248).

Where a party bears the burden of proof on a particular issue, the party may not rest on its pleading, but must affirmatively demonstrate, by specific factual allegations, that there is a genuine dispute requiring a trial. See Beard v. Whitley Cnty. REMC, 840 F.2d 405, 410 (7th Cir. 1988); Hickey v. A.E. Stanley Mfg., 995 F.2d 1385, 1391 (7th Cir. 1993). Therefore, if a party fails to establish the existence of anessential element on which the party bears the burden of proof at trial, summary judgment will be appropriate.

Where the parties file cross-motions for summary judgment, the Court must consider each motion, but despite the parties' agreement that no genuine issue of material fact exists, the Court can deny all motions if the parties do not establish their rights to judgment as a matter of law. Grabach v. Evans, 196 F. Supp. 2d 746, 747 (N.D. Ind. 2002). Furthermore, the Court is permitted to consider materials in the record whether or not they are cited to by the parties. Fed. R. Civ. Pro. 56(c)(3).

Facts1
Troyer

Troyer is an Indiana company that distributes upholstery-based and other products to the RV Industry. From the mid-1980s until January 1, 2005, Darlene and Ron Clark owned Troyer. Ron Clark was described as honest, straightforward, and someone who kept his word. (Darlene Clark Dep. at 21 (DE 65-2)).

Buck began working for Troyer in 1987, while still in high school. (Buck Dep. at 13 (DE 63-2)). By 1992, Buck was the General Manager and Chief Operations Officer of Troyer (a position he held until he left the company in August of 2012).(Id. at 19, 51 (DE 65-3)). The same year that Buck was promoted, Clark gave Buck two shares of the company and invited him to join the Board of Directors ("Board"). (Id. at 19).

In the mid-1990's, Troyer implemented an IRA program for its employees. Clark contacted Daniel Holtz ("Holtz"), a licensed securities dealer, to set up the program. In 1998, Clark asked Holtz to join Troyer's Board.

Buck and Clark applied for a life insurance policy through United.

On September 16, 2002, Clark and Buck applied for a life insurance policy with United. The application identified Clark as the insured, and Buck as the proposed owner and beneficiary of the policy.

Holtz, who at the time was only a Troyer Board member, was not involved in applying for the life insurance policy. Buck and Clark never discussed the policy with Holtz when they were completing the application.

The beneficiary of the policy was changed to Troyer.

Ultimately, the policy was issued with Troyer as the beneficiary. There are two competing versions of how this came to be. According to Troyer, United's underwriting department would not allow Buck to be the beneficiary of the policy. So, on February 5, 2003, United's underwriters "approved" the policyand noted, "amend owner as Troyer Products ... amend benef as Troyer Products." (Tylkowski Dep. at 61-62, 87 & Ex. 30 (DE 60-6)). According to United, due to tax concerns, Clark and Buck decided to amend the policy so that Troyer was the designated beneficiary. (Buck Dep. at 40 (DE 65-3)). For purposes of the instant motions, the reason for the change is not material.

On February 12, 2003, United sent Troyer the "policy output" packet which is "information that goes out in regard to the issuance of coverage." (Tylkowski Dep. at 64 & Ex. 28 (DE 60-6)). United included in this packet an amendment intended to change the owner and beneficiary of the policy to Troyer and asked Troyer to have the amendment "signed by the Applicant and returned to United of Omaha." Id.

On February 17, 2003, Clark and Buck signed the amendment. The amendment changed the beneficiary of the policy from Dave Buck to Troyer Products.

United issued the policy with Troyer as owner and beneficiary.

United issued Policy No. BU1096496 (the "policy") with the owner and beneficiary as Troyer, effective February 12, 2003. The policy's expiration date was February 12, 2039. The parties agree that the policy is a valid and enforceable contract.

Under the policy, United was required to pay Troyer $1,000,000 if Clark passed away before the expiration of thepolicy and no exclusions to coverage applied. If United failed to pay Troyer the death benefit within 30 days of the date United received proof of Clark's death, United agreed to pay...

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